Glossary

ROAS (Return on Ad Spend)

ROAS (return on ad spend) is the revenue generated per unit of ad spend: a ROAS of 4 means €4 of tracked revenue per €1 spent. It's the core efficiency metric for e-commerce campaigns, connecting spend directly to the money it brought back.

Formula: ROAS = Conversion value ÷ Cost

How to read it

The break-even ROAS depends on margin: at 50% gross margin you need ROAS 2 just to not lose money on the sale. Calculate your break-even before celebrating any ROAS number.

Where it misleads

ROAS ignores new-versus-returning customers and lifetime value. A high ROAS from retargeting existing buyers can hide that the campaign creates no new demand.

Related terms

Conversion Value →

Conversion value is the total monetary value the platform attributes to your conversions: typically order revenue in e-commerce, or values you assign to leads. It's the numerator of ROAS and the basis for value-based bidding strategies.

Cost / Spend →

Cost (or spend) is the total amount an ad platform charged for a campaign, ad group, or account in the selected period. It's the denominator of every efficiency metric (CPC, CPA, ROAS) and the number that has to match the client's media budget.

CPA (Cost per Acquisition) →

CPA (cost per acquisition, also cost per conversion) is the average amount you spend to get one conversion. It's the efficiency metric for lead and signup campaigns: as long as a customer is worth more than their CPA, the campaign makes economic sense.

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